If you run a business alone and do not form a company, the law considers you to be a sole proprietor. This style of business entity offers flexibility and minimal legal controls. One of the disadvantages of running a sole proprietorship, as opposed to a company, is that the owner is fully liable for all the debts incurred by the business. Washington laws require most businesses, including sole proprietors, to register with the office of the secretary of state. Further relevant laws deal with the choice of business name and anti-competitive business activities.
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You can run your business under your own name, or alternatively choose a trading name. The Washington Business Licensing Service regulates the use of business names in the state. You cannot use a name that is the same or likely to be confused with that of any other business operating in Washington. You can check the availability of your preferred business name and register your chosen name with an online document preparation service.
Business License Application
Washington State requires certain businesses to complete a business license application, if they sell goods to consumers or expect to earn over $12,000 a year. You can file the form either online, by mail or through an online legal service. You should include on the form details of your business activities, whether or not you intend to employ anyone else and your estimated gross annual income. Once filed, your business will receive a formal state business license and a unified business identifier number, to be used in all official correspondence.
Employer Identification Number
Any business that takes on employees must apply for an employment identification number, or EIN, from the IRS. You can complete the form with a document preparation service or mail it to the relevant IRS office. The Washington Department of Revenue will also provide details of your business’s state tax obligations once you have filed your business license application. Most businesses in Washington must pay business and occupation tax or a public utility tax.
Unfair Trade Practices
Washington’s Unfair Business Practices-Consumer Protection Act prevents businesses, including sole proprietors, from engaging in anti-competitive activities. Such activities include price fixing, group boycotts and bid rigging.
If your business hires any employees, you must register with the Washington Department of Labor and Industries and the Washington State Employment Security Department. You must also comply with federal and state employment laws on matters such as minimum wages, working conditions and rest breaks.
References & Resources
- Ryan, Swanson & Cleveland PLLC: Guide for Starting a New Business in Washington State
- Washington Secretary of State: Corporations Division – Ownership Structure Types
- State of Washington: Business Licensing Service – File a Business License Application
- Access Washington: Doing Business
- Citizen Media Law Project: Becoming a Sole Proprietor in Washington
- Washington State Office of the Attorney-General: Guide to Antitrust Laws
- Jupiterimages/Brand X Pictures/Getty Images